As we’ve been repeatedly stressing on our website, blogs, and social media handles, the shelf companies that we offer are ones that do not have any previous operations or finances. Any people who try to sell you shelf companies with credit facilities or tax returns are doing so with an intention to defraud you, and we have repeatedly warned you against such fraudsters, as they tarnish the image of the industry in which we operate. There are also a lot of sellers like us who are doing a good job and helping many people fulfill their business objectives, and succeeding in living out the great American dream.
USP of shell corporations
The unique selling proposition of shelf companies is not their financial attributes, but it is their vintage that makes them command a substantial price. That is why as a basic thumb rule, the older the shelf corporation, the more will be the price it will command in the marketplace, and the lower its age, the lesser will be its price.
Shore up your personal finances
Many people ask us why are we selling shell corporations if they do not have any operational history. The point here is buying shelf corporations is like putting some icing on your cake; without the icing, the cake does not look and taste the way it should. But the icing is not the essential ingredient for the cake; the essential ingredients are eggs, sugar, and baking soda. In the same way, it is not your shelf corporation or its features that will get you the funding that your business needs; it is your personal credit track record which will play a crucial role in fetching a credit limit for your business. Thus, you need to focus on your personal finances and ensure that they are in the best possible health.
When your personal finances are in good shape, then your shelf corporation will give you the edge that you are looking for. Just like age gives the desired flavor to your favorite wine, the vintage of the aged shelf corporation adds weight to your credit application and gives you the leeway to negotiate for better terms with financial institutions, vendors, and clients.
Moving on, the main focus of this particular blog post will be on some best practices to improve your chances of obtaining funding for your shelf company. It is these practices that you need to inculcate into the way you approach personal finances to give yourself the best possible chance to improve your credit score. If you are able to transfer these best practices and transform the way you manage your business, then you will see some huge benefits in the future. So without further ado, let’s get down to the details!
Minimum Personal Credit Scores
The first question that people ask us when we tell them that they need to focus on their personal credit scores is the minimum credit score that they need to get their company’s credit application approved. While you will find different sources giving you different answers, according to us, you need a minimum credit score of 700 to give your firm a good chance to pass muster. If your score is any higher than this, your chances will improve, and your business will probably get the initial boost that it requires. This is what we have learned through our extensive experience of assisting a plethora of small business owners in obtaining funding for their businesses. The rest of this blog post will be devoted to how you achieve this minimum credit score.
Never Max out the Limits of your Credit Card
This is one of the basics of personal finance, which we feel is not emphasized enough. The culture that is propagated to the masses encourages spending, without much focus on saving. Thus, most people spend as if there is no tomorrow. If you have such habits, then you need to change them immediately and cut down your extra expenses as soon as possible. You should never max out the limits of your credit card/s. Not only is this considered a sign of poor financial planning, but it also makes you vulnerable in emergency situations when you need immediate funds. So, what is the ideal percentage of use of credit card limits? According to our experience gained from examining tens of personal credit scores, we estimate that if you use one-third of your limits, and keep two-thirds of the limits for the bad times, then your scores will improve.
At least 3 open credit accounts
For your score to be at its optimum level, you need to have at least 3 open credit accounts. These may be personal loans, mortgages, auto loans or credit cards, or any other kind of financing that you may have obtained from a financial institution. So, what does an open credit account mean? This means that the institution has reported to the credit bureaus that the credit facility is ongoing. For loans, this means that some amount of money is still due to the institution from your side. In the case of credit cards, it means that you are using these cards issued by financial institutions, and these credit cards have not expired. There is no maximum limit for the number of open credit accounts but we advise you to be prudent in this matter. You should never have too many open credit accounts, as almost all banks and credit union charge fees for processing your application, and some also charge annual maintenance fees that you need to pay. You will also need to keep a track of these limits so that they do not get misused. As we all know, credit card fraud is very common in the United States, so you need to minimize your risk and not increase exposure to such fraudsters, by keeping too many credit cards.
In this post, we have given you some fundamentals that you should base your financial planning on so that the credit application for your shelf corporation is approved. We will build on these concepts in our next blog, to give you further practical insights on building your credit profile.
Also Read – Best Practices to get funding for your shelf company – Part 2
Read more on Shelf Corporation Here – When should you buy a Shelf Corporation? & Shelf Corporations and Credit